Thursday, January 27, 2011

Understanding the Rise of ChinaHow Do We in the West Make Sense of China and Its Phenomenal Rise?

Martin Jacques, author of "When China Rules the World", provides a viewpoint of what China is and will become. Jacques presents three building blocks to describe the "difference that is China": the civilization state, the notion of race, and the nature of the state.

Economic Rise of China Goldman Sachs projected that the Chinese economy will almost be the size of the American economy by 2025 and larger by 2027. By 2050, the economy of China will be twice the size of the economy of the United States. Also by 2050, the economy of India will be almost the same size as the economy of the United States. These projections were before the Western financial crisis. More recently, BNP Paribas projected China will have a larger economy than the United States by 2020. This is the post-Western financial crisis projection.

China Is Going to Change the World As China grows to the largest economy in the world, perhaps within a decade, Jacques states that "China is going to change the world in two fundamental respects. First, never before has the largest economy in the world been that of a developing country, rather than a developed country. Second, for the first time in the modern era, the dominant country in the world - which I think China will become - will be not from the West and from a very, very different civilizational roots. It's a widespread assumption in the West that, as countries modernize, they also Westernize. This is an illusion. It's an assumption that modernity is a product of simply competition, markets, and technology. It is not, it is also shaped equally by history and culture. China is not like the West and it will not become like the West."

How Do We Make Sense of China? How Do We Try to Understand What China Is? Jacques offers three building blocks for trying to understand what China is like:
* "First, that China is not really a nation state." China has been a nation state for about 100 years. Yet what gives China, and the Chinese, their sense of being China and Chinese comes not from the nation state era, which is what happened in the West, but from the earlier period, from the "civilization state". China is huge, both demographically and geographically, with a population of 1.3 billion people. China is diverse, pluralistic, and de-centralized. The most important political value is unity, the maintenance of the Chinese civilization. A nation state has one nation, one system. The Chinese "civilization state" is one civilization, many systems.
* "Second, of the 1.3 billion Chinese, over 90% of them think they belong to the same race, the Han. This is completely different from the world's other most populous countries - India, the United States, Indonesia, Brazil - all of them are multiracial. The Chinese don't feel like that. China is only multiracial really at the margins." The advantage is the Han identity has been the cement which has held this country together. The disadvantage is the Han have a very weak conception of cultural difference. "They really believe in their own superiority and they are disrespectful of those who are not."
* Third, the relationship between the state and society in China is very different from that in the West." In the West, "we legitimately believe the authority and legitimacy of the state is a function of democracy. The Chinese state enjoys more legitimacy and more authority amongst the Chinese than is true with any Western state. The Chinese state enjoys a very special significance as the representative, the embodiment, and the guardian of Chinese civilization, of the civilization state." Also, for one thousand years the power of the Chinese state has not been challenged - there have been no serious rivals. In the West, various sectors continually challenge the nation state's authority: religion, business, movements, etc. In the West, the state is viewed as an intruder, a stranger, whose powers need to be limited, defined, and constrained. "The Chinese view the state as an intimate - as a member of the family, as the head of the family, as the patriarch of the family." The Chinese concept of the civilization state is a "new kind of paradigm". "China believes in the market and the state. The market is combined with an extremely strong and ubiquitous state. The state is everywhere in China. Targets for the economy are set by the state. Large infrastructure projects have a long history in China (e.g. The Great Wall, The Grand Canal, Three Gorges Dam)."

The Future and World Change East Asia (China, Japan, Korea, Taiwan, et. al.) has a third of the world's population and is now the world's largest economic region. The world is beginning to be driven and shaped not by the old developed countries, but by the developing world. "The West is rapidly losing its influence in the world. The world inevitably as a consequence will become increasingly unfamiliar to us (Westerners). Because it will be shaped by cultures and experiences and histories that we are not really familiar with."

What Should the Western Attitude Be Towards This World That Is Very Rapidly Developing? Overall, Jacques sees positive in this fundamental shift. "For over 200 years, the world was essentially governed by a fragment of the human population. That's what Europe and North America represented. The arrival of China and India - between them 38% of the world's population - and others like Brazil and Indonesia, represent the most important single act of democratization in the last 200 years. Civilizations and cultures which had been ignored, which had no voice, which were not known about, which were not listened to, which were not known about, will have a different sort of representation in this world. As humanists, we must welcome, surely, this transformation.

(TED Talks) Understanding the Rise of China Speaking at a TED Salon in London, economist Martin Jacques asks: How do we in the West make sense of China and its phenomenal rise? The author of "When China Rules the World," he examines why the West often puzzles over the growing power of the Chinese economy, and offers three building blocks for understanding what China is and will become.

About Martin Jacques

Martin Jacques is the author of When China Rules the World: The Rise of the Middle Kingdom and the End of the Western World. He is a visiting senior fellow at the London School of Economics, IDEAS, a centre for the study of international affairs, diplomacy and grand strategy, and a visiting research fellow at the LSE’s Asia Research Centre. He is a columnist for the Guardian and the New Statesman.

His interest in East Asia began in 1993 with a holiday in China, Hong Kong, Singapore and Malaysia. After that, he found every reason or excuse he could find to spend time in the region, be it personal, for newspaper articles or television programs. In 1977, he became editor of Marxism Today, a post he held for fourteen years, transforming what was an obscure and dull journal into the most influential political publication in Britain, read and respected on the right and left alike.

In 1991, he closed Marxism Today and in 1994 became the deputy editor of the Independent newspaper, a post he held until 1996. In 1993 he co-founded the think-tank Demos.

Thursday, January 13, 2011

In the video below, Peter Tertzakian, chief energy economist at ARC Financial, believes that while oil may exceed $100 near term, oil will not rise dramatically to $120, $140, $150 as was the case in 2007 and 2008. He believes the 2011 trading range will mostly be $80 - $100. Darryl Guppy, a technical analyst, also sees $100 as a psychological resistance level and also $98 as strong resistance just below. However, Guppy feels if a breakout occurs above $100, oil may rise dramatically as it did in February 2008 when the $98, then $100, resistance levels were gained.

Peter Tertzakian says there is a limit to oil prices, the fundamentals have changed since the high oil prices of 2007 and 2008, oil will surpass $100 in the near future, but $80 - $100 is the most likely trading range for 2011. "The bulk of energy growth, and oil demand growth, is coming from China. Back in 2007 and 2008, energy growth was coming from all parts of the world." Tertzakian notes most of the oil demand growth is coming from developing countries of which 40% is from China. "Yet there is a limit to oil demand in that fundamental change takes place when the oil price gets too high."

There is a limit to oil prices now. Tertzakian says, "Society has a lot more options in finding substitutes (for oil)", than even 3 years ago. "Plus you can't diminish the supply side of the equation. New technologies are being used to liberate large quantities of natural gas, hydraulic fracturing, horizontal drilling, are also being applied to the oil side." He also believes domestic (USA) production of oil is going to rise after "30 or 40 years of it being in decline".

"If we do see a bump up in oil supply and oil demand mitigation, we are going to see the edge taken off the oil price wanting to go higher". Tertzakian notes $100 is a psychological price and barrier for oil as is $4.00 - $4.50 gasoline. "We really have to be watching the other side of the world, China, in particular their energy policies. China is putting together some pretty aggressive policies to try and diversify their energy 'diet'.

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